World cotton prices firmed or fell under Middle East, North African situation; business remains thin on domestic market

The cotton prices gradually either firmed or fell slightly during the week ended on May 28, 2011, as players found perplexed, shocked at the peace evaporating in some African and ME countries.
WORLD SCENARIO:
Definite picture about cotton production and consumption is vague. Since mid-2011 soaring futures prices had incited even USDA the highest cotton grower and exporters of cotton around 18 million bales. But natural and political developments changed minds to harvest pragmatically relevant production. The developments in Africa are heart rending, poor cotton grower call for 500 CAS against 105 CAS.
In Africa cotton growers are reportedly threatening peasant revolt. Brazil and Australia except minor weather setback have already record production, touching nearly four million bales. India has good cotton harvest with Bt on cotton paying well. When the US exhausted supplies, India as usual was keeping worry free with cotton supplies. India has been officially approached by Pakistan with a plea that over one million bales cotton is delivered against written accord for delivery around May. However Pakistan is presently mopping up cotton when offered by the sellers.
Reports are holding bright prospects - exports touching $14 billion. Some shock was expressed by some value-added leaders at the sudden change of textile minister who according to them had acted equitably giving good result. The future will be watch with some concern.
On Monday the US cotton futures closed down one percent, pressured by the broad sell-off in commodities and an extension of the weak demand for cotton seen since last week. The market was likely to fall further in coming sessions, although it could also turn positive by mid-June, when a better assessment could be made of damage caused to the US cotton crop by this month's flooding and drought. The key July cotton contract on ICE Futures US settled down 1.72 cents, or 1.1 percent, at $1.5389 per lb, dealing from $1.5747 to $1.5321. New-crop December finished unchanged at $1.1976, moving between $1.1850 and $1.2178. Monday's cotton volume on ICE Futures US was 70 percent below the 30-day average, Thomson Reuters' preliminary data showed.
On Tuesday the NY cotton saw its largest gains in two months, with new crop futures rising five percent from a combination of higher Chinese prices, and drought and flooding threatening new US plantings. A bullish forecast by Goldman Sachs on oil, another industrial commodity like cotton, also helped push up prices for the fiber. Cotton's new-crop, December, finished up six cents, or 5.01 percent, at $1.2576 per lb on ICE Futures US. It was the contract's biggest gain since March 31, when it rose almost six percent. ICE'S benchmark July cotton futures were flat, losing a fraction of a penny to settle at $1.5388 per lb. "An assortment of factors drove the market today, from China to the weather to Goldman, and activity largely centred around the new crop," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. Trading volume in the December contract stood at around 7,770 lots, not far behind July's 7,920 lots. Overall volume on ICE cotton was slightly above the 30-day average, after falling 70 percent below the norm on Monday, Thomson Reuters' preliminary data showed. The market had closed down one percent on Monday, pressured by a broad sell-off in commodities and an extension of the weak demand for cotton seen since the end of last week.
In Tuesday's session, cotton futures on ICE first took their cue from a surge overnight in Chinese cotton prices, quoted by the Zhengzhou Commodity Exchange.
On Wednesday the US Cotton finished with steep gains for a second day in a row, as two fronts of bad crop weather jeopardised the new planting season, leading participants to bet on a diminished crop in the United States. Cotton's new-crop, December, ended up 5.59 cents, or 4.44 percent, at $1.3135 per lb on ICE Futures US. Earlier, it reached a high last seen on April 26, a day after the contract posted its biggest gain since March 31, when it rose nearly six percent. ICE's benchmark July cotton futures also settled with strong gains of 2.15 cents at $1.5603 per lb, a 1.40 percent rise. Trading volume in the December contract stood at around 8,418 lots, not far behind July's 9,052 lots. Overall volume on ICE cotton for Tuesday came to 20,112 lots and was above the 30-day average, after falling 70 percent below the norm on Monday, Thomson Reuters' data showed.
On Thursday the US cotton futures closed lower on investor profit-taking to scupper a two-day advance and the start of fund rolling of market positions could put further pressure on the market, brokers said. The new-crop December cotton futures on ICE Futures US dropped 3.78 cents to close at $1.2757 per lb, dealing from $1.27 to $1.315.
ICE'S most-active July cotton futures fell five cents to finish at $1.5103 per lb, moving between $1.5075 to $1.5844. Total volume traded reached over 18,000 lots, a bare three percent below the 30-day norm, Thomson Reuters preliminary data showed. The inability of the July contract to race past the $1.59 area and the failure to surmount $1.31 in the December contract "prompted some profit-taking" in the market, said independent cotton analyst Mike Stevens in Mandeville, Louisiana. Volume traded in the cotton market stood at 21,654 lots, as of May 25, ICE Futures US data showed.
On Friday the US cotton futures finished higher on investor short-covering by players worried about a historic drought in the key growing state of Texas ahead of a holiday weekend. The cotton market will be closed on Monday for US Memorial Day. Trading resumes on Tuesday. The benchmark December cotton futures on ICE Futures US went up 1.93 cents to finish at $1.295 per lb, dealing from $1.2741 to $1.30. On the week, the market is up 8.13 percent. Spot July cotton added 1.64 cents to close at $1.5267. Total volume traded reached over 9,500 lots, about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. Volume stood at 19,974 lots, as of May 26, versus the prior tally of 21,654 lots, ICE Futures US data showed.
LOCAL TRADING:
The trading in cotton moved in low tone, as buyers showed little enthusiasm owing to price not considered favourable. The sellers held back. Spot rate remained unchanged at Rs 8500, seed cotton of low type was doing at Rs 2500, while the higher quality price ruled at Rs 3000. Some 1400 bales of cotton changed hands at Rs 8300 and Rs 8600 depending on quality. The mills were inclined to buy on perception of higher exports. The buyers had in view sowing has started in cotton growing, though, some fields were in immediate need of water for strenuous growth.
On Tuesday firmer conditions prevailed, as cotton exporters were visible buyers to cover forward deals. Spot stayed put, phutti prices depicted no change as low quality ruled at Rs 2500, while superior type was done at Rs 3000. Modest buying was seen around 4000 bales mostly by exporters at Rs 7100 and Rs 8500 depending on the quality. The sellers were adroitly holding back stocks in hope of good return by mid-2011. However, millers and exporters were still expecting downward drift in cotton rate.
On Wednesday trading in cotton faced bad weather condition sending prices modestly higher on NY line. Spot rate maintained same volume, as phutti ruled on previous lines. The rising trend led to only 2000 bales changing hands at Rs 7800 and Rs 8600. Bad weather ie rains and thunders storms in Punjab and drought-like conditions are having adverse effect on the growth.
On Thursday low buying sustained, as prices refused to budge, spot rate and phutti prices were left at the previous size. The buying stretched past to Rs 15000 bale in price range of Rs 7600 and Rs 8700 depending on the quality. The buyers are calculative who think prices should be lowered but sellers with manageable stocks hold prices back. Even today buyers had known NY prices turned weak but sellers response was lacking.
On Friday official spot rate was unchanged at Rs 8,500. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business over 1,500 bales of cotton changed hands between Rs 7,500-8,700 (conditional). Market sources said that the mills are not in a hurry to make new deals in a big way ahead of budget in anticipation of relief to boost the textile sector. On the other hand, the ginners were not cutting down the prices of fine quality on expectations of increase in the rates in the near future.
On Saturday lean business was seen as mills kept to the sidelines in the absence of motivating factors. Official spot rate was unchanged at Rs 8,500. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business 1000 bales of cotton changed hands between Rs 8000-8,500.
COS' MONOPOLY AFFECTS COTTON YIELD:
"Government was supporting local seeds and pesticides manufacturers, but support was not justified" well-placed sources said. They said government support was not justified as local manufacturers have yet to develop Bt cotton more than a decade after most countries producing cotton pounced on Bt cotton instantly doubling the production and emerged as top exporters.
In this write up open inquiries were made as to why Bt cotton is not grown here. It was often reminded the certified cotton could be bought from the inventor in America. The gains are manifold Bt cotton is immune from pest and diseases and yields double than the seeds do in this country and elsewhere. Very low tone desire was often expressed, which a little more louder was heard during president Musharraf, but attempt was declared as failure.
Those watching the half-hearted bid came in the open and declared the seeds used as spurious. Those watching closely the lurch some hitch was being created to continue with the locally available seeds, which produce cotton much less than the Bt cotton being grown in India and China.
In Pakistan often plans are made for producing 15 million bales. But acreage fixed give yield of 9 to 10.1 million bales. The spurious seeds were used in the running season but was washed away, some said in low tone. A little louder-determination has been reported the other day - Sindh is venturing to introduce Bt cotton. Is Bt cotton seed from America from the company which introduced Bt cotton and selling to growers in India and China and elsewhere. If Sindh, which produces qualitatively low cotton than Punjab and improves its production from one or two million bales right seed use will be confirmed. Some virgin land was planned to grow more cotton in Balochistan will that be Bt cotton.
TEXTILE SECTOR AND FREE MARKET ECONOMY
In business and exports stakeholders were incredibly hyper sensitive about economic principles such as free market economy and, held no less dear to supply and demand. Those economists, who gave vent to their honest feelings, plausibly had never envisaged in weak system of one or the other stakeholders. If there is drought or damage on any count production is expected much less in quantity. Under the circumstances buyers will be in large numbers, while sellers would in much less numbers.
The result is obvious, particularly ethics find no place in countries with weak system. The bemoaning value-added exporters have no alternative but to reach textile minister who exercise power to restrain hoarding or bid to export yarn in order to be available and at cheaper rate.
This year this way textile exporters gained edge over rivals leading exports worth $14 billion, a record creating, a history. In the meantime authorities were looking for reshuffling minister, dropping the first ever textile minister, simultaneously replacing him with a new one.
The cotton growers this year enjoyed windfall owing to cotton reaching century old price above $2 or like amount. Nothing played any part. Many, according to the knowledgeable circles cotton rate is gradually dipping down and hope repeat performance of 2010-11 wont be witnesses at least not to that high. They recalled burning of Pak cotton in the recent past because quality was considered below international standard. Imports of billions of dollar worth cotton was an annual feature. Bt cotton is introduced world over for not only quantitatively better production but also qualitatively better cotton. So far explanation has lacked, as to why Bt-cotton has not been given importance China and India have.
SINDH FARMERS RESENT ACUTE WATER SHORTAGE:
If successive governments had not utterly failed in Pakistan to build water reservoir there would be no such frequent complaint. Every government during the last six decade built forts of promises but when they were succeeded by fresh rulers the forts collapsed as incumbents took resort behind the failure of the ones they took over from. Only the other day it is claimed a flood of that magnitude was not seen in years, that created havoc to roads, bridges, standing crops exasperated by selfish zamindars, while the precious water raced for sea.
Now Sindh Chamber of Agri (SCA) is wailing as acute shortage of water in Kotri Barrage because Sindh is not receiving water in accordance with the 1991's water accord. No need to strains mind that harassment caused by the last floods. Sindh farmers would try to retrieve as far as possible from rushing kharif crops. The SCA demanded end to the water ration programme.
The partiality by influentials should be judged by judicial inquiry or it feared destroy standing crops. The sea took exception of Sindh government who signalled direct outlets from different canals and channels despite shortage of water. Surprised as it was, it expressed and opposed with full vigour that government should drop levy of 17 percent General Sales Tax on tractors being given to growers at subsidised prices. It called upon authorities to eliminate shortage of urea fertiliser long loadshedding was restricting irrigation of tube-wells. The call should be attended to save from damages to standing crops.
TEXTILE NEEDS SUPPORT TO END TRADE DEFICIT:
For decades, barring some years after this country emerged on the map of the world, imports have dominated. Call to at least level up the trade deficit has remained a dream. Cotton and textile exports have been major strength of the fragile economy. But economists and thinkers who see God gifted potential in abundance do call for exports of knowledge based or skilled based products.
Information technology (IT) progressed in some years but it has not matched even India. The need, however, to eliminate deficit lingers on the EDB in its latest Industrial Bulletin has branded Sialkot as "Surgical instruments capital of world". Despite such higher professional advice the patronage that was due was never paid.
Once a report some months back said that non-textile products scored highest forex. And most of the products were excellent products from Sialkot. The surgical instruments excel all products of like make elsewhere. At a workshop on challenges and potentials of surgical instruments and industry federal minister for industries underlined the increasing role of surgical industry in national economy.
He called upon the industry for gradual transformation to manufacturing of high-tech and more value added instruments. Similar praise has been showered by dozens of people without the clue how could Sialkot forge towards goal we cherish. Thus the trade deficit could vanish in thin air and begging bowl broken for ever.